Willkie Assists Momentive Performance Materials in Successful Restructuring
On October 24, 2014, Momentive Performance Materials, Inc. and its affiliates (“MPM”) successfully consummated its prenegotiated plan of reorganization and exited from bankruptcy just six months after its bankruptcy filing. Willkie led the complex representation of MPM, a maker of silicone and quartz products, and 11 of its affiliates in connection with their chapter 11 bankruptcy cases before the Honorable Robert D. Drain in the United States Bankruptcy Court for the Southern District of New York. Prior to its filing, Willkie led the negotiation and documentation of MPM’s prenegotiated plan of reorganization, which had the support of approximately 90% of its second lien noteholders. The restructuring resulted in the elimination of more than $3 billion of debt from MPM’s balance sheet. Willkie successfully represented MPM in heavily contested hearings including a one-week trial with respect to the confirmation of its proposed Plan of Reorganization. On August 26, 2014 in a four-hour-long bench ruling, Judge Drain ruled in favor of the Debtors on every contested point. Among other rulings, Judge Drain approved the cramdown provisions of the Plan applying the Supreme Court’s decision in Till to award a below-market rate of interest on replacement securities for senior lenders, in a decision that may have repercussions in many future restructurings. Trustees for certain of the Company’s debt issuances have appealed Judge Drain’s decision to the District Court for the Southern District of New York.
The matter was primarily handled by partners Matthew Feldman, Rachel Strickland, Joseph Baio, Roger Netzer, James Dugan, William Hiller, Henry Cohn and Cristopher Greer; special counsel Ajanaclair Lynch; associates Jennifer Hardy, Theodore Neos, Dan Kozusko, Ji Kim, Andrew Mordkoff, Christopher Koenig, Nicole Naples, Veronica Ng, Joseph Antignani, Stephen Mouritsen, Alexis Anzelone, Kevin Brown and William O’Brien.
Willkie Obtains Victory for Marsh in Precedent-Setting Trial Involving “Special Relationship”
On October 30 in the U.S. District Court for the Southern District of Florida, a jury returned a unanimous verdict in favor of Willkie client insurance broker Marsh USA Inc. in the first case to go to trial involving an emerging area of potential broker liability called a "special relationship." While there was no claim that Marsh had breached either the terms of its contract or the standard duties owed by brokers, the plaintiffs, the Tiara Condominium Association, asserted that Marsh should be required to pay roughly $35 million because it had entered into a special relationship with Tiara that obligated Marsh to advise Tiara on the amount of windstorm insurance to buy – a duty typically left to a professional appraiser.
The concept of imposing heightened duties on insurance brokers, often referred to as a special relationship, has been gaining some acceptance in courts across the country. For example, the New York Court of Appeals recently has recognized that a broker, either expressly or by its conduct, can take on heightened duties to its client through a special relationship. While courts have recognized the concept, it is believed that the claim against Marsh was the first to be tested through trial.
During the trial, Willkie established that for a special relationship to exist, the insurance broker had to agree to perform more than those services regularly performed by commercial insurance brokers in a standard relationship. Further, Willkie persuaded the court and the jury that the key to finding a special relationship is the transfer of decision making authority; for a special relationship to exist, the insurance broker must be in the “driver's seat” with respect to selecting the types and amounts of insurance the insured will purchase.
After a two-week trial, the nine-person jury returned a unanimous verdict, agreeing that Marsh had not entered into a special relationship with Tiara. It is expected that the case will set a key precedent for insurance brokers as the "special relationship" doctrine continues to develop across the country. The matter was handled by partners Mitchell Auslander and Christopher St. Jeanos, assisted by special counsel Ian Hochman, associates Frank Scaduto, Jim Fitzmaurice, Jocelyn Sher, and law clerk Le-Anh Bui.
Prudential Announces $1.4 Billion Pension Risk Transfer Transaction with Bristol-Meyers Squibb
Willkie recently advised Prudential in its $1.4 billion pension risk transfer transaction with Bristol-Myers Squibb Co. The transaction, which was announced on September 30, 2014, comes on the heels of the September 25 announcement of the pension risk transfer transaction between Prudential and Motorola Solutions. Read Willkie’s Announcement. Under the terms of this transaction, Bristol-Meyers Squibb has agreed to purchase a group annuity contract from The Prudential Insurance Company of America that will transfer to Prudential responsibility for the administration and payment of $1.4 billion of retirement benefits to approximately 8,000 Bristol-Meyers Squibb retirees. The transfer to Prudential is expected to occur in December 2014 and is subject to satisfaction of closing conditions.
The Prudential Insurance Company of America is the principal subsidiary of Prudential Financial, Inc., a financial services leader with more than $1.1 trillion of assets under management as of June 30, 2014 and operations in the United States, Asia, Europe and Latin America. Through its subsidiaries and affiliates Prudential Financial offers a wide array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management, to individual and institutional customers through one of the largest distribution networks in the financial services industry.
The matter was handled by partner Vladimir Nicenko and associates Christian Ercole and Patrick Tedesco. Partner Donald B. Henderson, Jr. assisted on insurance regulatory matters.